he FTSE 100 was set to plunge more than 1% today after US markets were spooked by renewed fears of inflation.
US government bond yields jumped yesterday as inflation expectations hit their highest levels since 2011 on Wall Street.
Rising commodities prices and survey evidence showing inflation is on the march in the US have been major themes of recent weeks’ trading.
Stock market investors fear that, if it gets out of hand, the Federal Reserve will have no choice but to accelerate plans to tighten its super-easy monetary policy and raise interest rates or taper its asset buying programme.
Both strategies would increase the cost of credit for businesses and hit their share prices.
Sentiment on the issue ebbs and flows day by day, but yesterday the fear gauge was definitely running high on Wall Street, triggering a big fall on the Nasdaq which looks set to spill over into European trading.
While President Joe Biden’s strategy of pushing through trillions of dollars of fiscal support to get the US out of the worst economic effects of Covid has helped share prices, the inflationary…
